Professional Tax Confusion: Should We Deduct Based on Full or Earned Salary?

If an employee has a salary of Rs. 20,000/-, we consider the following scenarios:

Scenario in March

In March, the employee does not have any Loss of Pay (LOP) days, thus they receive the full salary of Rs. 20,000/-. In such a case, we deduct the Professional Tax (PT) on the full amount, i.e., Rs. 150/- as per Andhra Pradesh state PT slab.

Scenario in April

In April, the employee has 10 days of LOP. Therefore, the employee works only 20 days, and the payable salary is Rs. 13,333/-. The question is, should we deduct the PT based on the original salary of Rs. 20,000/- or the earned salary of Rs. 13,333/-?

I am seeking clarity on this matter.

Professional Tax (PT) is a state-level tax in India, and the rules can vary between states. As per the Andhra Pradesh Tax on Professions, Trades, Callings, and Employments Act, 1987, PT is deducted based on the gross income earned in a particular month.

Therefore, if an employee has Loss of Pay (LOP) days in a month resulting in a reduced salary, the PT should be calculated on the earned salary, not the original gross salary.

So, in your example, for the month of April where the employee has 10 days of LOP, and the payable salary is Rs. 13,333/-, the PT should be deducted based on this amount.

However, it's always advisable to refer to the latest state government notifications on PT as these rules can be subject to change. For accurate information, you can visit the official Andhra Pradesh state government's website.